Brown to tell Britain: it's good to work

The Budget aims to help the low-paid, writes Paul Routledge

GORDON Brown is obsessed with work. He can't get enough of it, and he wishes the rest of us shared his Presbyterian work-ethic. But he is enough of a politician to understand that for most people work is only a means to an end: making a living.

So his second Budget on Tuesday will be substantially devoted to "making work pay". This is the populist message behind the most radical programme of tax and benefit reform to be put to Parliament in post-war years. It promises to be a watershed in social policy. Tony Blair's official spokesman insists it will be a "big, reforming Budget".

Treasury aides are naturally reticent about the actual contents, but it is clear that Mr Brown will flesh out the general policy outlines put forward in his pre-Budget report published last November. There will be four main themes: stability, work, enterprise and fairness. Within this general shape there will be a concentration on the family, women and children.

Mr Brown intends to make this Budget - which is essentially the second half of his first Budget, unveiled last July - the designer's mark for a Labour government seeking re-election. He will argue that this administration will be the one that deals "once and for all" with economic boom and bust (perhaps the most exotic political claim of recent history) and the hitherto intractable problems of welfare spending running out of control.

The Chancellor intends to replace family credit with a working families tax credit, administered by the Inland Revenue and giving rebates to families on poverty pay. The measure will also deflect criticism of Labour's controversial treatment of single mothers by going some way towards compensating lone parents for losses of up to pounds 11 a week in benefits pushed through Parliament earlier in the winter.

He will also unveil plans to make it easier for low-paid people to get work, by shifting the burden of employers' national insurance contributions from those at the bottom of the pay spectrum to those at the top. It will be cheaper to employ the lower paid - even on the National Minimum Wage of around pounds 3.60 an hour, due to be enacted by the summer, which Mr Brown hails as "John Smith's legacy".

Furthermore, parents in households earning less than pounds 20,000 a year will be looked after by a new Child Care Credit scheme which will encourage mothers to go out to work knowing that the cost of looking after their children will be substantially born by the state. This is part-fulfilment of Mr Brown's promise to the Scottish Labour Party last week to "help modernise the welfare state, encourage work and help low-paid families".

On the same day as the Budget, a report by Barclay's Bank chief Martin Taylor on radical reform of the tax and benefit system will be published. One week later, Social Security Secretary Harriet Harman will bring out her long-awaited Green Paper on reform of the welfare state. Mr Brown's intention is to keep the reform train running throughout his Chancellorship. These two initiatives will form "Phase Two" of his programme after the introduction of windfall-tax-financed welfare to work.

He will also reiterate his intention to drive ahead with the five-year programme to reduce Britain's pounds 400bn national debt, which costs the nation pounds 25bn a year in interest payments - as much as the Government spends on schools each year. Aides say his dearest wish is to eliminate the national debt, by periodic repayments. In pursuit of that goal he will signal three more years of tight curbs on public spending to match the financial restraint he inherited from John Major. Expect to hear a great deal about building up "long-term strength" in the economy and "prudence for a purpose".

In other terms, Mr Brown will bring an orthdodox Budget to the Commons. The price of cigarettes will go up by around 20p on a pack of 20. Petrol will go up by about 25p a gallon, in line with the UK's environmental treaty obligations, and duty on alcohol will also rise - although Westminster is rife with rumours than the Chancellor will give some help to the Scotch whisky industry.

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